Weekly OptionsSo far we have been discussing options that expire on the third Friday of the month. There is another time frame for a few select options, those that are created and expire within one week. In 2005, the CBOE introduced four weekly index options: SPX, XSP, OEX, and XEO. These are cash-settled options. SPX weeklies use the S&P 500 index as the underlying, are traded beginning on Thursday morning, and expire the next Thursday’s market close with settlement the following Friday. SPX weeklies are European-style options which cannot be exercised before the expiration date. XSP weeklies are similar to SPX but is smaller sized at 1/10 the value. OEX weeklies are American-style options that use the S&P100 index as the underlying, with trading starting every Friday morning and expiring at the following Friday’s close. The XEO weekly is identical to the OEX weekly except that it is a European-style option which cannot be exercised before the expiration date. As of June, 2010, the CBOE announced that it will begin trading new weekly options on four exchange traded funds (ETF's): Standard and Poor’s Depositary Receipts (SPY), Nasdaq-100 Index Tracking Stock (QQQQ), DIAMONDS Trust, Series 1 (DIA), and iShares Russell 2000 Index Fund (IWM), are now traded. And, as of July 5, 2010, the weekly options on the following became available: GLD, XLF, EEM, C, BAC, AAPL, BP, F, and GOOG. Since then, even more have been added, including the equity issues AIG, ANF, FFIV, FSLR, GMCR, CLF, HAL, PCX, DNDN, BIDU, CSCO, GS, MSFT, GE and many others. In the ETF space, FAZ, FAS, GDX and USO are also now trading weekly options. For a compete list of the ever-growing number of weeklies available for your consideration, visit the
CBOE weeklies site.
Weekly options may also have good potential as credit spreads candidates. If any readers have experience with weekly options, please share it with us via the Contact Page of this website. I will see that it gets put on the website.
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